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Trump Administration Freezes Obamacare Payments

Kevin Lamarque

By Michael Rainey

July 9, 2018

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The Trump administration announced Saturday that it will freeze billions of dollars in payments to insurance companies participating in the federal health program established by the Affordable Care Act.

The "risk adjustment" payments, which do not involve taxpayer money, are meant to help insurers who face higher-than-expected costs for their ACA patients. Insurers pay into a fund that is redistributed according to the relative health of their insurance pools, transferring money from companies with healthier patients to those with less healthy ones. The risk payments for 2017 total $10.4 billion.

The Trump administration said that a New Mexico court ruling in February, which found fault with the risk payment method, forced it to suspend the payments for 2017. Critics have pointed out that a Massachusetts court upheld the same method, and questioned the need to freeze payments.

The suspension of the payments is expected to further destabilize the federal insurance markets and drive ACA premiums higher in 2019. "Insurers hate uncertainty, and when faced with it tend to raise premiums to hedge their bets," Larry Levittt of the Kaiser Family Foundation told NPR. "When the rules of the game change after the fact – insurers don't necessarily see the federal government as a particularly reliable partner right now. This is one of several steps the Trump administration has taken to undermine the ACA," added Levitt.

Nicholas Bagley, a law professor at the University of Michigan, was more critical, writing on his blog that “the needless suspension of the risk adjustment program is a signal that the Trump administration remains intent on sabotage. Already, insurers were stiffed on their risk corridor money. Then the cost-sharing payments evaporated. Now, even risk adjustment money may go up in smoke. What’s next? This is no way to run a health program, and no way to run a government.”